Auto Bailout: GM May Axe Pontiac, Hummer, Saturn and Saab

US News ^ | Dec 01, 2008 | US News

[Cronos]

General Motors manufactures eight brands of automobiles. When executives of America's biggest automakers return to Capitol Hill carrying business plans explaining how they would spend the federal bailout they've asked for, the automaker may propose trimming itself to just four

Bloomberg reports that the company "is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said. Selling or dropping brands would save money and reduce overlap as the biggest U.S. automaker struggles to avoid running out of operating cash by year's end, said the people, who didn't want to be identified because no decision has been made."

The move would leave GM selling just Buick, Cadillac, Chevrolet and GMC vehicles.

Left out of the discussion so far is exactly what process GM would use to eliminate the overlapping brands. Autoblog comments, "The word ‘shedding' is used to describe what GM would do with Saturn, Pontiac, and Saab. But we don't know where and how they would shed them." Selling the brands to other automakers isn't likely. "With the state of lending and credit markets, it would probably be easier to buy a pterodactyl than get a loan to buy one of GM's brands. HUMMER's already been on the block so long it's about to get arrested for loitering." Instead, GM is probably looking at simply shutting them down

Analysts have believed for years that GM needs to shed some brands in order to survive, but the automaker can't simply shut down a brand without a massive infusion of cash. Bloomberg points out, "GM agreed to eliminate the 103-year-old Oldsmobile brand in 2000 because of declining sales."

But eliminating Oldsmobile is believed to have cost the company over $2 billion -- money used to buy out dealer contracts and settle lawsuits filed by Oldsmobile dealers whose businesses were ended by the move. As markets open today, GM's total net worth is just slightly over $3 billion, and the company is believed to have less than a one-month supply of cash on hand.

Policymakers considering the bailout must also note that shutting down brands would mean, as Autoblog points out, "some serious upheaval and tens of thousands of job losses," which is what the bailout plan is supposedly designed to prevent.

Eliminating overlapping brands, however, looks like a great idea to investors. MarketWatch reports that GM shares " rallied during Friday's holiday-shortened trading session ahead of [this] weeks crucial meetings in Washington that could lay the groundwork for a federal bailout of the ailing auto industry." The value of GM shares surged almost ten percent after they "caught buyers' interest on reports that the company is considering shedding its Saturn, Saab and Pontiac brands as part of its effort to cut costs and secure the government loans." The company was already widely reported to be looking for a way to get rid of its stake in Hummer.

Colorado's Grand Junction Free-Press says that dealers who sell the cars "haven't received direction or assurance from the companies that make the cars on their lots."

While the bailout debate goes on, automakers are trying to sell cars as fast as possible with deep discounts. Research the best car deals with U.S. News' Car Reviews.

[Cronos]

Even the best solutions look fraught with problems

[Cronos]

Isn’t it like past midnight in Japan now?

[org.whodat]

The move would leave GM selling just Buick, Cadillac, Chevrolet and GMC vehicles.

And why not the GMC's they are just a Chevrolet with a different sticker, and cost additional advertising to sell.

[The_Victor]

This is what GM needs to be doing, cutting unprofitable ventures, not running around Washington with it's hand out.

[Robe]

Isn’t Saturn built in Franklyn, Tenn, and is a non union shop?

[ZX12R]

When the autoworkers are getting great pay and great benefits, I’m delighted for them. But when they need taxpayer money to keep the scheme going, I’m hoping for their demise. The big three need to fix their own damn mess, or go out of business. If they get one nickel, I’ll never buy another vehicle from them, and will work hard to influence others to do the same.

[amishman]

Exactly. They should dump Buick as well. Frankly, they should just dump it all and rename all their cars General Motors or GMC. Have GMC trucks, GMC Camaro, GMC Corvette, GMC Malibu, GMC Cadillac (the upscale model), etc. Ford-Lincoln-Mercury-Jaguar-Mazda-Volvo should do the same. You just have a bunch of the same cars with different grills and nameplates on them. Cut the fat.

[montesquiue]

It’s in Spring Hill, TN which is close to Franklin.

[Red Badger]

Jag is owned by Tata Motors of India now...............

[Red Badger]

They should dump Buick as well.

From WIKI: The Buick Lucerne is a full-size car sold by the Buick division of General Motors that replaced the Park Avenue and the LeSabre in 2006. Although the rear-wheel drive GM Zeta platform was considered, the production Lucerne introduced at the Chicago Auto Show on February 9, 2005 rides on the revised G-body platform of the late Pontiac Bonneville. Initial sales of the Lucerne have been strong, with the car claiming 24% of the full-size sedan market in the United States.

[Brookhaven]

“And why not the GMC’s they are just a Chevrolet with a different sticker, and cost additional advertising to sell.”

GMC brand makes it possible for non-Chevy dealers to sell trucks. I don’t know about other parts of the country, but in the south trucks (pick ups particularly) are the bread and butter of most dealer’s sales. Most of the Buick and even Cadillac dealers would probably go out of business if they couldn’t also sell GMC trucks.

[The_Victor]

They should dump Buick as well. Frankly, they should just dump it all and rename all their cars General Motors or GMC. Have GMC trucks, GMC Camaro, GMC Corvette, GMC Malibu, GMC Cadillac (the upscale model), etc

The Chevrolet brand probably has more customer loyalty and name recognition, but you're right, they need dump car lines that don't sell, and consolidate and rebrand the ones that do. Declaring bankruptcy under chapter 11 and getting out of their union contracts would help a lot as well.

[WayneS]

For YEARS I have been saying that GM should re-organize as follows:

GMC - Trucks, SUVs and Suburbans ONLY.
Chevrolet - “Mini-Vans”, “Cross-overs” (whatever they are), Base and Mid-Level sedans/hatchbacks ONLY (with exception of the iconic Corvette)
Pontiac - ALL Small and Sporty cars (except the iconic Corvette)
Cadillac - Top end sport sedans and luxury cars.

Sell Saab back to the Swedes.

That’s IT. No overlap among “brands” and NO OTHER lines of cars.

Dealers would be GM dealers, with an optiojn to “specialize” in one or more of the “brands”, but a requirement to make any/all of them available to the customer.

[sushiman]

It’s 10:24 p.m. New York 8:24 a.m .

[The_Victor]

Jag is owned by Tata Motors of India now...............

bodacious Tata Motors, every garage should have a pair.....

[chrisser]

And why not the GMC's they are just a Chevrolet with a different sticker, and cost additional advertising to sell.

I could see some rationale for leaving the light duty truck market under the Chevrolet brand and having GMC be strictly the commercial truck and chassis division.

There is some overlap, however. While its unlikely that the consumer buying a Silverado is also going to buy a dump truck, there is some liklihood that the business buying dump trucks may also need Sierras.

The consumer dealer is likely not going to have the experience dealing with fleet/large truck companies.

The solution might be to allow GMC commercial truck dealers to access the Chevrolet light-truck inventory under a revised division.

As the article mentions, there's more to consider beyond what makes sense at the product level though, at least in the short term - there are also dealer contracts to consider and that gets pretty complicated, I imagine.

[Sig Sauer P220]

I like my 2006 Saturn Vue. It has a Honda motor.

[org.whodat]

Most of the Buick and even Cadillac dealers would probably go out of business if they couldn’t also sell GMC trucks.

Someone has to go out of business!!!

[Red Badger]

[from occupied ga]

Even the best solutions look fraught with problems

GM needs to go chapter 11